Contributions of the Living Building Challenge to Triple Bottom Line Reporting Jiajia Ge
Transcript of Contributions of the Living Building Challenge to Triple Bottom Line Reporting Jiajia Ge
Moving Forward towards Sustainability:
Contributions of the Living Building Challenge to Triple Bottom Line
Reporting
Jiajia Ge
A thesis
submitted in partial fulfillment of the
requirements for the degree of
Master of Urban Design and Planning
University of Washington
2014
Thesis Committee:
Jan Whittington
Joaquin Herranz Jr
Program Authorized to Offer Degree:
Urban Planning and Design
©Copyright 2014
Jiajia Ge
Moving Forward towards Sustainability: Contributions of the Living Building
Challenge to Triple Bottom Line Reporting
By Jiajia Ge, 2014, 75 pgs.
Chair of the Supervisory Committee: Professor Jan Whittington
Sustainability-related reporting by companies and organizations has been developed with
the growth of the notion of sustainability since the 1970s. More recently, Triple Bottom Line
(TBL) reporting, one form of sustainability-related reporting which looks at a company’s
environmental, social and economic aspects, has been widely researched and discussed. The G4
Sustainability Reporting Framework (Framework) put forward by the Global Reporting Initiative,
is the most recognized and practiced TBL reporting structure. More and more companies
worldwide, especially big multinational firms such as the Fortune Global 500, do TBL reporting
under the Framework, aiming to keep on track with their vision and mission, to assist decision-
making, to promote their public image, to share information with stakeholders, and to gain
positive economic benefits. However, among these sustainability pioneer companies, no
construction or real estate companies are seen.
The real estate and construction sectors, together with the many fields and industries
associated with them, make up one of the larger components of the global economy (Plunkett
Research 2014). As of 2012, the U.S. Bureau of Labor estimated that 5.64 million Americans
were employed in the construction industry. About $885.1 billion in new American construction
was put in place during 2012, according to the U.S. Bureau of the Census (Plunkett Research
2014). As the construction and real estate sector also has a high impact on climate change,
natural resources and natural ecosystems, if the sector notices the benefits of doing sustainability
reporting, it will push forward their sustainability agenda.
The construction and real estate sector puts sustainability into practice by means of
reaching standards such as building and planning codes, Leadership in Energy & Environmental
Design certification and affordable housing. The Living Building Challenge (LBC) is the
“greenest” one among them, and it concerns all three bottom lines of TBL reporting. This thesis
aims to answer the question: How does the LBC Prepare Developers for TBL Reporting? If we
can bring the LBC and the Framework together, the combination will facilitate TBL reporting of
the construction and real estate sector.
The paper concludes that the LBC has excellent performance on the environmental aspect,
the data of which are appropriate for environmental performance reporting. The LBC includes
less data about economic and social performance, but assists TBL reporting indirectly. The LBC
helps to ensure reporting contents and quality as well. Apart from criteria listed on the
Framework, the LBC also identifies criteria specific for the construction and real estate sector,
such as beauty of the project and car free living, which may add value on a building projects’
sustainability performance.
The research results suggest that developers or property managers who construct or
manage buildings meeting the LBC to think about preparing TBL reporting. The reason is that
the LBC data collected from the buildings are adequate to start TBL reporting and environmental
data are quite resourceful and detailed. Further, the research findings are helpful to equip other
interest groups, such as designers, planners and policymakers, to design and construct more
sustainable buildings and communities.
Table of Contents
INTRODUCTION ....................................................................................................................... 1
LITERATURE REVIEW ............................................................................................................ 4
Triple Bottom Line and Global Reporting Initiative ............................................................... 4
Living Building Challenge .................................................................................................... 24
METHODOLOGY .................................................................................................................... 33
Hypothesis ............................................................................................................................. 35
Comparison between the GRI Framework and Living Building Challenge ......................... 36
RESULTS.................................................................................................................................. 41
What Do Interviewees Say .................................................................................................... 41
The Circumstances of Application ........................................................................................ 42
Comparison between the Living Building Challenge and the GRI Criteria .......................... 44
Function of Living Building Challenge Supplemental Resources ........................................ 54
Living Building Challenge’s Contribution to Overall Reporting Contents and Quality ....... 55
DISCUSSION ........................................................................................................................... 59
CONCLUSION ......................................................................................................................... 62
REFERENCES .......................................................................................................................... 65
Appendix 1: Definitions of Key Terms of the Framework ....................................................... 70
Appendix 2: Living Building Challenge Criteria ...................................................................... 71
Appendix 3: Interview Questions .............................................................................................. 73
Appendix 4: G4 Sustainability Reporting Framework Criteria ................................................ 75
Figures
Figure 1 Triple Bottom Line Idea ................................................................................................... 6
Figure 2 Triple Bottom Line Maximizes Business Value ............................................................. 8
Figure 3 Relationship Between Sustainability Reporting and Sustainability Accounting. ......... 13
Figure 4 Structure of the GRI Sustainability Reporting Framework and Its TBL Contents ....... 18
Figure 5 Benefits of Sustainability Reporting ............................................................................. 23
Figure 6 Various Requirements of Buildings’ Performances as to Sustainability ....................... 27
Figure 7 Concept Diagram of Thesis Methodology .................................................................... 34
Tables
Table 1 Comparison between GRI Framework and the LBC ...................................................... 35
Table 2 GRI Framework and LBC Criteria Comparison ............................................................. 46
Table 3 Indirect Contributions of the LBC to the GRI Framework ............................................. 48
Table 4 LBC's Contribution on Reporting Content and Quality.................................................. 57
Table 5 LBC’s Contribution to Triple Bottom Line Reporting ................................................... 62
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INTRODUCTION
Sustainability has evolved since the 1970s. Sustainability-related reporting has developed
with the growth of the notion of sustainability. There is a trend among companies worldwide,
especially big multinational firms such as the Fortune Global 500, to do sustainability-related
reporting (Hahn and Kühnen 2013, 9). Triple bottom line reporting, one form of sustainability-
related reporting, is also widely researched and discussed. Triple bottom line reporting is an
integrated reporting of an organization’s economic, environmental and social performance. By
integrating triple bottom Line reporting, organizations push forward their sustainable agenda.
Among all currently widely used sustainability-related reporting systems, the G4 Sustainability
Reporting Framework (GRI Framework) put forward by the Global Reporting Initiative (GRI), is
the most recognized and practiced one. The GRI Framework provides general guideline and
sector guidance specifically for ten sectors, including construction and real estate.
The construction and real estate sector has a high impact on climate change, natural
resources and natural ecosystems. In socio-economic terms, the built environment has significant
direct and indirect impacts on social wellbeing and the livelihoods and prosperity of local
communities and individuals. Through its various activities as a major employer, the sector can
impact local economies by providing jobs, training and industry. It provides homes, education
and recreational facilities for communities, yet it can also be responsible for displacing people
(GRI 2011). It is important for developers, property managers, planners and policy makers to
better understand the potential utility of triple bottom line reporting in the built environment field.
The Living Building Challenge is a pioneer in the built environment field to encourage
the creation of next generation sustainable buildings, sites and communities. The Living Building
Challenge may supplement triple bottom line reporting in that the Living Building Challenge
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tries to offer practical responses to environmental, social and economic difficulties (LBC 2014b).
Since the Living Building Challenge was put forward in the 1990s and promoted in 2000s, there
has been little study into it. However, the Living Building Challenge became more prominent,
with the completion of the Bullitt Center in March 2014. The Center is the largest building so far
designed to reach the Living Building Challenge standards. The Center brings the Living
Building Challenge into practice and pushes forward sustainability agenda.
This thesis aims to answer the question: “How does the Living Building Challenge
prepare developers for triple bottom line reporting?” It tries to impart to readers with an
understanding of triple bottom line reporting, using the GRI Framework as a role model of
reporting, and how the Living Building Challenge can be integrated into triple bottom line.
Further, it aims to better equip developers and other interest groups, such as planners and
policymakers, to design and construct more sustainable buildings and communities.
The initial audience of this thesis is developers or property managers who construct, own
and operate buildings. Planners and policy makers interested in sustainability and sustainable
buildings, and wondering how the Living Building Challenge can be combined with triple
bottom line reporting, may also find this thesis helpful. Any organizations baring sustainability
in mind and working in the built environment field, such as green building construction
companies, architecture firms designing sustainable buildings, or triple bottom line community
development funds, can find this thesis helpful to their organizations to track their performance
and fulfil their missions.
The purpose of this research is to examine the relationship between the Living Building
Challenge and triple bottom line reporting. This thesis does not try to prove the justification of
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the Living Building Challenge or the GRI reporting framework; neither is it guidance for
developers on how to use triple bottom line reporting.
The paper’s organization is as follows: “Chapter 1 Introduction” introduces the
background of triple bottom line and the Living Building Challenge, puts forward the research
question, and offers information on the audience and organization of the thesis. “Chapter 2
Literature Review” lists the literature regarding the history of triple bottom line, how triple
bottom line has been practiced, and how organizations do triple bottom line reporting. It also
looks at the development of the Living Building Challenge, standard and criteria of the Living
Building Challenge, and the Living Building Challenge in practice. “Chapter 3 Methodology”
introduces the research methods of the thesis. “Chapter 4 Results” presents the results drawn
from the research. “Chapter 5 Discussion” analyzes and synthesizes the research findings, and
discusses the significance of the findings. “Chapter 6 Conclusion” summarizes the thesis context.
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LITERATURE REVIEW
Triple Bottom Line and Global Reporting Initiative
Starting from Sustainability
The concept of sustainability has evolved for about a half century. The most commonly
acknowledged definition of sustainable development was given by Brundtland Commission in its
1987 report Our Common Future: “development that meets the needs of the present without
compromising the ability of future generations to meet their own needs.”
Sustainability-related reporting has been developed alongside the emergence and
development of the notion of sustainability. In the 1970s, social reports appeared to complement
companies’ traditional financial reports (Hahn and Kühnen 2013; Daub 2007). In the 1980s,
environmental issues drew the public eye and companies started to bring in environmental
reports alongside their financial reports (Kolk 2004, 51; Kolk 2010, 368). In 1998, for example,
35% of the 250 biggest Fortune Global 500 companies were already producing environmental
reports (Kolk 2010, 367; Kolk et al. 2001, 17). In the 1990s, researchers such as John Elkington
started to advocate for triple bottom line thinking which integrates economic development,
environmental protection and social equity (Elkington 1998). Since his groundbreaking work,
there has been a trend for annual reports to include more information on social and
environmental aspects of the companies’ activities (Daub 2007, 78). This type of reporting has
evolved to multidimensional reporting (Kolk 2010,368), and recently even integrated reporting,
which brings sustainability information together with traditional financial information in a single
report to provide a holistic picture of value creation over time (KPMG 2011, 3). Today there are
several worldwide sustainability-related standards such as the Global Reporting Initiative (GRI),
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ISO 14000 series, SA 8000 and AA 1000. These standards provide relatively big companies with
options for sustainable reporting (Morhardt et al. 2002, 220). However, the GRI Framework is
the only widely-recognized standard that integrates all three aspects of triple bottom line
(Rodrigo and Huisingh 2011, 101).
Although on some occasions, the notion of sustainability covers economic, ecological,
political and cultural aspects (Global Compact Cities Program 2014), the commonly
acknowledged goals of sustainability were identified in the 2005 World Summit on Social
Development. The goals are economic development, social development and environmental
protection (United Nations General Assembly 2005). These goals coincide with the contents of
triple bottom line. Researchers in many cases use triple bottom line reporting and sustainability
reporting interchangeably (Kolk 2001; Hahn and Kühnen 2013). Sustainability reporting is
defined as a public report that “contains qualitative and quantitative information on the extent to
which the company has managed to improve its economic, environmental and social
effectiveness and efficiency in the reporting period and integrate these aspects in a sustainability
managements system” (Daub 2007, 76). In this thesis, sustainability reporting and triple bottom
line reporting are equivalent to one another, and both of them cover economic, environmental
and social aspects. Research looking at only one or two bottom lines of triple bottom line
thinking inadequately defines sustainability reporting. However, in this thesis, sustainability-
related reporting that only covers one or two bottom lines is considered a report that is not
complete.
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Development of Triple Bottom Line
Triple bottom line thinking was first put out by John Elkington in his book Cannibals
with Forks, aiming to put forward a term in the sustainability field to resonate with the business
world (Elkington 1998). At that time, social and economic dimensions of sustainability drew
people’s attention after being put forward in 1987’s Brundtland Report, but there is no link of
sustainability agenda with corporate social or environmental efforts (Henriques and Richardson
2004, 1). In his book, Elkington argues that sustainable development involves the simultaneous
pursuit of economic prosperity, environmental quality, and social equity. “Companies aiming for
sustainability need to perform not against a single, financial bottom line but against triple bottom
line” (Elkington 1998, 387). Figure 1 is a simple illustration of triple bottom line idea.
Elkington argues that seven revolutions cause sustainable capitalism transition, they are:
markets, values, transparency, life-cycle technology, partnerships, time and corporate
governance (Henriques and Richardson 2004, 3). The first revolution of market is driven by
competition. For the foreseeable future, business will operate in markets that are more open to
Economic Social
Environmental
Figure 1 Triple Bottom Line Idea
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competition, which forces companies to learn to spot the market conditions and appeal to the
market. Competitiveness of the market challenges companies about their triple bottom line
commitments and performance. The second revolution is driven by the worldwide shift in human
and societal values from taking values as a given, to soft values. According to precedents such as
Shell’s experience during the Brent Spar and Nigerian controversies and Texaco’s huge effort to
bury the controversy about its poor record in integrating ethnic minorities, companies may crash
because of values-based crises. The third revolution is fuelled by growing international
transparency. As a result, companies will find their thinking, commitments and activities under
increasingly intense scrutiny worldwide. Companies, in the meanwhile, are increasingly using
disclosed information to compare, benchmark and rank the performance of competing companies.
The fourth revolution, life-cycle technology, switching from product oriented to function
oriented, is driven by the transparency revolution. Companies are being challenged about triple
bottom line implications either of industrial activities far back down the supply chain or about
the implications of their products in transit, in use and after their useful life has ended. The fifth
revolution will dramatically accelerate the rate at which new forms of partnership spring up
between companies. Organizations will increasingly build new relationship forms with
opponents who are seen to hold some of the keys to success in the new order. The sixth
revolution will promote a profound shift in the way that companies perceive and manage time,
because the sustainability agenda is pushing companies towards ‘long’ time. The seventh
revolution of corporate governance is driven by each of the other revolutions. Elkington argues:
“The better the system of corporate governance, the greater the chance that we can build toward
genuinely sustainable capitalism. (Henriques and Richardson 2004, 6)”
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Based on his perspective that the companies are facing such revolutions, Elkington
proposes a learning process for business to better face challenges and improve performance. The
process includes 5 steps: invasion of new technology/business model that causes new impacts,
internalization of externalities to society or the environment, inclusion of wider range of
stakeholders, integration of new priorities in business, such as health, environment, and safety,
and incubation of new technology/business models. Advocates of triple bottom line believe the
introduction of triple bottom line to the business world will optimize the integration of social
capital, natural capital and economic capital, thus maximizing business value (Brian and Cohen
2002). Figure 2 illustrates this opinion.
Figure 2 Triple Bottom Line Maximizes Business Value (Brian and Cohen 2002, 129)
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Triple Bottom Line and Corporate Social Responsibility
Many companies do sustainability-related reporting, in response to changes that they
bring to society. In academic discourse, this is called “corporate citizenship”, “corporate social
responsibility” and “corporate responsiveness” (Daub 2007, 77). These terms describe the wide-
ranging responsibility of a company towards its stakeholders and society as a whole. Dyllick and
Hockerts assert companies need to maintain their economic, social and environmental capital
base to achieve corporate sustainability (Thomas and Hockerts 2002, 132). The European
Commission defines Corporate Social Responsibility (CSR) as “the responsibility of enterprises
for their impacts on society…to integrate social, environmental, ethical, human rights and
consumer concerns into their business operations and core strategy” (Hahn and Kühnen 2013,6).
Based on this similarity, this thesis considers CSR reporting as triple bottom line reporting when
it covers all three economic, environmental and social aspects consistent with companies’
sustainable performance.
Although both CSR and triple bottom line generally cover economic, environmental and
social aspects, they are slightly different. The definition of CSR contains more meaning in the
social aspect than merely social equity. For example, it includes consumer concerns, direct and
indirect stakeholders, and future stakeholders. The central element of CSR, a concern with
stakeholders, is inevitable in triple bottom line. For organizations to ensure that no important
sustainability issues have been overlooked, it is crucial for them to work with the full range of
their stakeholders (Henriques and Richardson 2004, 27). In terms of economic aspect,
profitability, which is of central concern to shareholders, is one element of the economic aspect,
but not all of it (Henriques and Richardson 2004, 29). This means that the financial aspect is only
one component of economic impact/performance of a company. Two consequences of this
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should be borne in mind. The first is that the scope of the economic aspect must be distinguished
from the expression of environmental or social impacts in financial terms. The second is that
unlike the other two aspects, the externalities of the economic aspect are hard to identify. In the
GRI Framework, which is a major literature studied in this thesis, the economic dimension of
sustainability concerns the organization’s impacts on the economic conditions of its stakeholders
and on economic systems at local, national, and global levels. It does not focus on the financial
condition of the organization (GRI 2013a, 4). Triple bottom line thinking also means more than
social equity in the traditional sense when it refers to social equity or social justice. Elkington
deems “(social equity) in the form of public health, skills and education. But it also must
embrace wider measures of a society’s health and wealth-creation potential. (Elkington, John.
1998, 85)” In this paper, the social bottom line not only takes into account traditional social
equity groups such as low-incomes and politically under-representatives, but also the broader
meaning of social benefits which contains the benefit of consumers, direct and indirect
stakeholders, and society as a whole.
Accounting for Sustainability
Sustainability or CSR is measured by means of sustainability accounting, which aims to
gather data that support internal decision-making concerning corporate sustainability. Traditional
accounting is strictly regulated by external legislation and professional standards. This is not the
case for social and environmental accounting, where indicators are often determined inside the
organizations, leading to low information quality and causing low-quality reports (Henriques and
Richardson 2004, 21). Both business and accounting professions have been trying to create new
metric to gauge corporate sustainability. Much of the focus has been on accounting for the
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environmental aspect of triple bottom line. Bennett and James identify six domains of firm-level
environmental accounting: energy and materials accounting, environment-related financial
management, life-cycle assessment, life-cycle cost assessment, environmental impact assessment,
and environmental externalities assessment (Bennett and James 1998; Henriques and Richardson
2004, 168). If a firm is seriously committed to the idea of environmental accounting, it need to
manage and control both its internal environmental costs and reduce the external environmental
costs resulting from its activities (Henriques and Richardson 2004, 101).
Environmental accounting researchers have been adopting and developing traditional
accounting methods to environmental accounting. Full cost accounting is an emerging
accounting practice, which attempts to integrate the total cost of corporate economic activities,
including social and environmental costs (Hahn and Kühnen 2013, 7). O’Dwyer notes that by
internalizing external costs, through tools such as eco-taxes, full cost accounting enables prices
to reflect their full environmental costs, which would then flow to the consumption and
production chain, consequently reinforcing more sustainable patterns of behavior (Henriques and
Richardson 2004, 174). More recently, there has been renewed interest in developing social
indicators and various experiments in full cost, triple bottom line and sustainability accounting
(Bebbington et al. 2007, 228). Another genre of emerging sustainability accounting practice is
input–output analysis, which involves accounting for the physical flow of materials, energy
inputs and products including waste outputs in physical units. This is facilitated using the
accounting principle of double entry and transparency (Henriques and Richardson 2004, 174).
While actively putting triple bottom line thinking into practice, triple bottom line
accounting raises critiques. The majority of the critiques focus on the validity of applying
accounting methods to environmental and social bottom lines and how to integrate the three
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bottom lines. Norman and MacDonald argue that “what is sound about the idea of triple bottom
line is not novel, and what is novel about the idea is not sound” (Norman and MacDonald 2004,
243). Ngwakwe, in the meantime, emphasizes that in order to address environmental and social
challenges, accounting requires a more pragmatic paradigm (Ngwakwe 2012, 29). Although
triple bottom line accounting has spurred some element of sustainable development from both
the accounting profession and the corporations, it seems that the voluntary nature of triple
bottom line and its framework is acting as a setback and as such weakens sustainable
development efforts from the accounting and corporate sector. Hence triple bottom line is
currently practiced according to the whims of corporate executives. What is commonly
orchestrated today as sustainability accounting within the accounting profession is more of a
weaker form of triple bottom line and appears to contribute limitedly to the ideals of sustainable
development (Ngwakwe 2012, 34).
Triple Bottom Line as a Reporting Tool
On the basis of reliable accounting data, sustainability reporting then provides and
substantiates information about the status and progress of corporate sustainability. Triple bottom
line reporting informs internal and external stakeholders through formalized means of
communication (Burritt and Schaltegger 2001; Hahn and Kühnen 2013, 5; Elkington 1998, 171).
The relationship of sustainability accounting and reporting is shown in figure 3.
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Figure 3 Relationship Between Sustainability Reporting and Sustainability Accounting. (Hahn
and Kühnen 2013, 7)
Morhardt et al. (2002, 215) concluded four major reasons for companies to report their
performance, they are: to comply with regulations and to reduce the cost of future compliance, to
comply with industry environmental codes, to decrease operating costs, and to improve
stakeholder relations. Other incentives include the perceived environmental visibility of the firm,
a sense that such improvements will result in competitive advantage, a sense that without active
environmental management the firm’s legitimacy is in question and a sense of social
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responsibility and desire to adhere to societal norms (Morhardt et al. 2002, 216). A KPMG 2011
study shows that reputation or brand, ethical considerations, employee motivation and innovation
and learning are top four reasons for Fortune Global 250 (G250) companies to do corporate
reporting (KPMG 2011, 19). According to this report, 70% of G250 published sustainability
reports in 2011, while the number is 50% in 2002 and 37% in 1999 (KPMG 2011, 3). The study
indicates almost half of the G250 companies reported gaining financial value from their CSR
initiatives (Henriques and Richardson 2004, 19). Given all the advantages mentioned above, the
possibility for companies in the built environment field to gain benefits from their triple bottom
line reporting if they decide to do so.
Triple bottom line thinking is receiving increasing attention. Elkington notices the
frequency of mentions of triple bottom line increased dramatically from year 1999 to 2001
(Henriques and Richardson 2004, 2). One review of triple bottom line indicates that in 2004 and
2011, research in the topic of triple bottom line showed a significant boom (Hahn and Kühnen
2013, 9). This study, based on 108 articles analyzing determinants of sustainability, shows that
companies’ social and environmental performance has little relationship with whether or not they
do reporting (Hahn and Kühnen 2013, 10). On the one hand, companies may want to signal good
performance, implying a positive effect on reporting. On the other hand, companies with a
weaker performance may face greater stakeholder pressure, thus they may be more actively
engaged in reporting to mitigate legitimacy threats (Hahn and Kühnen 2013, 12). The research
shows that large companies tend to do more reporting than smaller companies, likely because
larger companies cause greater impacts, become more visible, and therefore face greater
stakeholder scrutiny and pressure. Meanwhile small companies might have higher marginal costs
of disclosure (Henriques and Richardson 2004, 10). However, the research also shows that there
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is a strong focus, in the reviewed literature, on large and multinational enterprises. Among the
108 articles, merely 11 address small and medium-sized enterprises and only 3 of them do so
exclusively (Henriques and Richardson 2004, 15). To keep up with the worldwide trend of
increasing attention to triple bottom line reporting, and to draw scholars’ attention to triple
bottom line reporting in the built environment field, it is worth researching the possibility of
adopting triple bottom line reporting in construction and real estate sector.
Although sustainability accounting and reporting have received increased relevance in
business and academia, this thesis focuses on reporting because the disclosure and the
internal/external communication of triple bottom line/sustainability information directly
contribute to a company’s supply of critical resources from various stakeholders (Hahn and
Kühnen 2013, 13). Sustainability reporting meets Elkington’s proposal of companies practicing
transparency and engaging stakeholders (Elkington 1998, 159). Moreover, the GRI Framework,
the major method of this thesis, is a reporting structure aiming at creating triple bottom line
reporting for disclosure. The GRI Framework offers a unilateral standard for non-financial
reporting which can be voluntarily used to create reports to achieve certain standardization in the
field (Hahn and Kühnen 2013, 7).
Global Reporting Initiative
Among all the sustainability-related reporting frameworks, such as the ISO 14000 series
on environmental performance, the SA 8000 on social aspect, and the AA 1000 on social and
ethical aspect, the GRI Sustainability Reporting Framework (GRI Framework) comes to the fore
(Lozano and Huisingh. 2011, 101). The GRI Framework is a self-defined triple bottom line
reporting system. 95% of the 250 biggest Fortune Global 500 companies report their
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sustainability performance, with 80 percent of these using the GRI Guidelines, which is the main
body of the GRI Framework, according to the KPMG study (KPMG 2011, 12). GRI also has the
only international reporting framework for organizational sustainability/triple bottom line
performance that is designed to be applicable for public agencies. Public agencies including the
Ministry for Environment, New Zealand, the NHS Purchasing and Supply Agency, the United
Kingdom, the Department of Family and Community Services, Australia and the Architectural
Services Department, Hong Kong SAR, China are adopting the GRI Framework (GRI 2004).
The GRI aims at providing “globally shared frameworks of concepts, consistent language, and
metrics” to “communicate clearly and openly about sustainability” (GRI 2011). However, the
GRI focuses more on environmental and social bottom lines and only covers a few general
economic indicators (Hahn and Kühnen 2013).
GRI promotes the use of sustainability reporting as a way for organizations to become
more sustainable and contribute to sustainable development. GRI defines a sustainability report
as a report published by a company or organization about the economic, environmental and
social impacts caused by its everyday activities (GRI 2014a). GRI was founded in Boston in
1997, rooted in US non-profit organizations the Coalition for Environmentally Responsible
Economies (CERES) and the Tellus Institute. The aim was to create an accountability
mechanism to ensure companies were following the CERES Principles for responsible
environmental conduct. Investors were the GRI Framework’s original target audience. In 1998, a
multi-stakeholder Steering Committee was established with a pivotal mandate to report more
than the environment aspect. On this advice, the GRI Framework’s scope was broadened to
include social, economic, and governance issues. GRI’s guidance became a Sustainability
Reporting Framework, with the Reporting Guidelines at its heart. The first version of the
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Guidelines was launched in 2000. On the advice of the Steering Committee, CERES separated
GRI as an independent institution in 2001. The second generation of Guidelines, known as G2,
was unveiled in 2002 at the World Summit on Sustainable Development in Johannesburg. GRI
was referenced in the World Summit’s Plan of Implementation. The United Nation’s
Environment Program (UNEP) embraced GRI. In 2002 GRI was formally inaugurated as a
UNEP collaborating organization, and relocated to Amsterdam as an independent non-profit
organization. In the 2005 World Summit on Social Development, the GRI was introduced among
all the other initiatives (Global Compact Cities Program 2014). The uptake of GRI’s guidance
was boosted by the 2006 launch of the third generation of Guidelines, G3. Over 3,000 experts
from business, civil society and the labor movement participated in G3’s development. In 2011,
GRI published the G3.1 Guidelines – an update and completion of G3, with expanded guidance
on reporting gender, community and human rights-related performance. In May 2013, GRI
released the fourth generation of its Guidelines, G4, which is the theme of this thesis (GRI
2014a).
The GRI Framework consists of the GRI sustainability reporting guidelines and sector
guidance (GRI 2014a). The reporting guidelines offer reporting principles, standard disclosures
and an implementation manual for the preparation of sustainability reports by organizations,
regardless of their size, sector or location. Reporting principles lay the big picture of a
company’s performance. Specific standard disclosure, which is part of the standard disclosure, is
the major triple bottom line element of the reporting system. Definitions of key terms of the GRI
Framework can be found in figure 4 below shows the structure of the GRI Framework, and how
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triple bottom line is presented in the GRI Framework.
Figure 4 Structure of the GRI Sustainability Reporting Framework and Its Triple Bottom Line
Contents
GRI Sustainability Reporting
Framework (GRI Framework)
GRI Sustainability Reporting Guidelines
Reporting Principles
Principles for Defining Report
Content
Principles for Defining Report
Quality
Standard Disclosure
General Standard Disclosures
Specific Standard Disclosures
Disclosure on Management
Approach (DMA) Indicators by Aspects
Economic Aspect
Environmental Aspect
Social Aspect
Implementation Manual
GRI Sector Guidance
Integration of Triple Bottom Line
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Reporting Principles
The reporting principles are fundamental to achieving transparency in sustainability
reporting and therefore should be applied by all organizations when preparing a sustainability
report. The reporting principles are divided into two groups: principles for defining report
content (including stakeholder inclusiveness, sustainability context, materiality and completeness)
and principles for defining report quality (including balance, comparability, accuracy, timeliness,
clarity and reliability).
The principles for defining report content guide decisions to identify what content the
report should cover by considering the organization’s activities, impacts, and the substantive
expectations and interests of its stakeholders. The principles for defining report quality guide
choices on ensuring the quality of information in the sustainability report, including its proper
presentation. The quality of the information is important to enable stakeholders to make sound
and reasonable assessments of performance, and take appropriate actions (GRI 2013a, 8).
Standard Disclosures
The guidelines offer two options to an organization in order to prepare its sustainability
report ‘in accordance’ with the guidelines: the core option and the comprehensive option. The
core option contains the essential elements of a sustainability report, and provides the
background against which an organization communicates the impacts of its economic,
environmental and social and governance performance. The comprehensive option builds on the
core option by requiring additional standard disclosures of the organization’s strategy and
analysis, governance, and ethics and integrity. Standard disclosures contain general standard
disclosures and specific standard disclosures. No matter which option an organization chooses to
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follow, core or comprehensive, it should report both the general standard disclosures and the
specific standard disclosures. For the completeness of the research, the comprehensive option is
been chosen for the thesis. In other words, all criteria are researched in this thesis.
The general standard disclosures are applicable to all organizations preparing
sustainability reports. The disclosures include strategy and analysis, organizational profile,
identified material aspects and boundaries, stakeholder engagement, report profile, governance,
and ethics and integrity. The specific standard disclosures are organized into three categories -
economic, environmental and social, which are in accordance with triple bottom line. The social
category is further divided into four sub-categories, which are labor practices and decent work,
human rights, society and product responsibility. Criteria of the GRI Framework are called
material aspects, which reflect the organization’s significant economic, environmental and social
impacts; or substantively influence the assessments and decisions of stakeholders. The
information reported for each identified material aspect can be disclosed as disclosures on
management approach (DMA) and as indicator(s).
Implementation Manual
The implementation manual provides valuable information about:
How to understand, interpret and implement the concepts mentioned in the reporting
principles and standard disclosures;
How to select and prepare the information to be disclosed in the final report; which
references can be useful when preparing a report;
21
How to apply the reporting principles;
How to identify material aspects and their boundaries; and
How GRI content helps to report on the organization’s implementation of the
organization for economic cooperation and development
According to the implementation manual, the economic dimension of sustainability concerns
the organization’s impacts on the economic conditions of its stakeholders and on economic
systems at local, national, and global levels. It does not focus on the financial condition of the
organization (GRI 2013a, 62).
Sector Guidance
G4 also has sector guidance for ten sectors: airport operators, construction and real estate,
electric utilities, event organizers, financial services, food processing, media, mining and metals,
NGO, oil and gas (GRI 2011). The sector guidance makes reporting more relevant and user-
friendly for organizations in diverse sectors. The construction and real estate sector is the most
relevant sector among ten sector disclosures offered by GRI. GRI creates geographically diverse,
multi-stakeholder working groups by recruiting volunteer experts from around the world to
develop sector guidance. Sector supplement working groups typically include approximately
twenty members. Of these, 50% are from the industry and 50% come from non-industry
organizations (GRI 2014b). The construction and real estate working group consists of faculty,
researchers, engineers, realtors, and NGO/NPO staff from policy, real estate, energy, engineering,
and labor protection industries from all over the world (GRI 2014c). The sector disclosures
contain both general standard disclosures and specific standard disclosures (GRI 2014b). The
22
sector disclosures are on step forward to issue informative industry-specific reporting. This thesis
includes the construction and real estate sector disclosure in the analysis.
The construction and real estate sector disclosures are intended for companies that (GRI
2011, 8) invest in, develop, construct, or manage buildings, and invest in, develop or construct
infrastructure. For the purpose of these sector disclosures, infrastructure assets relate to new
construction, and demolition and redevelopment of infrastructure only. Management and
occupation of infrastructure is not included in the scope of these sector disclosures. Infrastructure
asset types include transport infrastructure, social infrastructure, environmental infrastructure,
energy infrastructure and other infrastructure including fixed or mobile telecommunication
networks and broadcast facilities.
Global Reporting Initiative in Practice
About 6198 organizations do sustainability reporting under GRI Framework for above
reasons (GRI 2014d). The list includes but is not limited to Hydro Quebec, Royal Dutch Shell,
Bank Asia, Dell, SouthWest Airlines Co. Ltd. and Sterlite, Industries. Shell Company has been
cooperating with GRI and issuing triple bottom line reports since 1997 (Shell Company 2014a).
The Shell Sustainability Report 2013 reports on the company’s economic, social and
environmental aspects (Shell Company 2013). The report summarizes data of year 2013, and
presents past data for comparison. The report gives equal weight to all the three aspects, and
particularly mentions spill accidents and labor safety, which are big concerns for oil companies.
The GRI disclosures quick view indicates that the Shell Company fully reported one-third of all
disclosures, partially reported one-third of the disclosures, and not reported about one-third of
the disclosures (Shell Company 2014a). Data availability is constrained because of inherent
23
limitations to accuracy of environmental and social data, and timeliness of data, as the report
only includes data available by the end of March 2014 (Henriques and Richardson 2004, 104).
GRI believes an effective sustainability reporting cycle should benefit all reporting
organizations. Figure 5 summarizes the benefits mentioned by the GRI.
Internal benefits External benefits
Increased understanding of risks and
opportunities
Emphasizing the link between financial and
non-financial performance
Influencing long term management strategy and
policy, and business plans
Streamlining processes, reducing costs and
improving efficiency
Benchmarking and assessing sustainability
performance with respect to laws, norms, codes,
performance standards, and voluntary initiatives
Avoiding being implicated in publicized
environmental, social and governance failures
Comparing performance internally, and between
organizations and sectors
Mitigating – or reversing –
negative environmental, social
and governance impacts
Improving reputation and
brand loyalty
Enabling external stakeholders
to understand the
organization’s true value, and
tangible and intangible assets
Demonstrating how the
organization influences, and is
influenced by, expectations
about sustainable development
Figure 5 Benefits of Sustainability Reporting (GRI 2014e)
For benefits mentioned above, it is worth doing the sustainability reports for the
construction and real estate industry, however, unavailability of some environmental and social
data may hinder the reporting process and lower reporting quality. Thus, this thesis intends to
research how the Living Building Challenge helps companies prepare their sustainability
reporting. The following section introduces the Living Building Challenge.
24
Living Building Challenge
Most practices in the built environment field focus on one or two bottom lines. LEED is a
green building certification deals with environment and energy saving. At the local level, for
example, the Seattle 2030 District is a high-performance building district in downtown Seattle
that aims to dramatically reduce environmental impacts of building construction and operation.
The City of Seattle enforces an Energy Benchmarking and Reporting Program that requires
owners of non-residential and multifamily buildings in the City to track and report energy
performance annually. Developers such as Common Ground particularly work in the affordable
housing field, contributing to social equity. A community plan program called the Community
Cornerstones taking place in south east Seattle focuses on economic and social bottom lines,
seeking to build a new model for equitable development that supports the existing economically
and culturally diverse residents and businesses while also welcoming new ones. Although still
evolving, the Living Building Challenge, among others, is a certification that with the most
consideration of all the three bottom lines. It aims to lead the transformation to a world that is
socially just, culturally rich and ecologically restorative (LBI 2014a). The latest version of the
Living Building Challenge is designed to address critical social and economic issues (McLennan
2009). The Living Building Challenge won the prestigious Buckminster Fuller Challenge Award
in 2012, for its “solutions that address a pressing global problem, with a comprehensive approach
taking in social, environmental, economic and cultural factors” (Rala 2014).
The idea for the Living Building Challenge emerged in the mid-1990s during an effort to
produce the most advanced sustainable design project in the world: the EpiCenter in Montana,
led by Bob Berkebile and Kath Williams. Working with Berkebile at BNIM, Jason F. McLennan
guided the research and technology solutions for the EpiCenter. In the process, he also began to
25
conceptualize the requirements for what is now known as a living building. Although the
EpiCenter was never built, Berkebile and McLennan continued to develop the idea and published
several related articles. They brought in biomimicry notion into architecture in 1999 (Berkebile
and McLennan1999), and developed the idea of integrating technology with nature in 2004
(Berkebile and McLennan 2004).
In 2000, BNIM, hired by the David and Lucile Packard Foundation, examined the
economic and environmental implications of a living building alongside the various levels of
LEED certification. The findings were presented in a document called the Packard Matrix, which
demonstrated that a Living Building was the smartest long-term choice economically, although it
carried a hefty first-cost premium (Craig Scranton 2014). The Institute’s Living Building
Financial Study proved that first-cost premiums have diminished, and certain building types
make immediate financial sense (Craig Scranton 2014).
With the effort of McLennan, the Living Building Challenge version 1.0 was formally
launched to the public by the Cascadia Green Building Council in August 2006, and version 2.0
in 2007. The version 2.0 refined the requirements of the program and demonstrated how to apply
the imperatives to different scales of development-from partial building renovations to whole
structures, and from individual landscape and infrastructure projects to entire neighborhoods.
In response to the increasing global attention and interest, Cascadia founded the
International Living Building Institute in 2009. The Institute certified the first projects in 2010,
which changed the green building movement on a fundamental level. Groups from Mexico,
Ireland, Australia, Germany, and other countries around the world reached out to learn more
about the Living Building Challenge. This reflects that people from all parts of the world are
26
looking for practical, hopeful responses to environmental, social and economic difficulties (LFI
2012).
At the beginning of 2011, the Institute was renamed as the International Living Future
Institute, with a mission to lead the transformation to a world that is socially just, culturally rich
and ecologically restorative. Currently, the Institute is promoting the Living Building Challenge
Standard 2.1, which is composed of seven performance areas, or petals: site, water, energy,
health, materials, equity and beauty. Petals are subdivided into a total of twenty imperatives,
each of which focuses on a specific sphere of influence (LFI 2012). Appendix 2 presents every
imperative and its definition and explanation. From the petals we can see that the Living
Building Challenge focuses more on environment and less on equity. While the Living Building
Challenge does not integrate economic efficiency directly, it does try to achieve economic
benefits by applying advanced construction and financial techniques. The Institute explores
alternatives that will “help shift limited investment capital towards a restorative built
environment by integrating social and environmental benefits into investment models, appraiser
methodologies, and supporting policies” (LFI 2012).
The Living Building Institute has been promoting and rounding-out the certification. A
2009 study’s primary finding is that living buildings can be built cost effectively in today’s
market driven economy, given the rising costs of energy and water. The conclusion is supported
by the relatively short payback period reported by the study for many of the thirty six buildings.
Twenty-four of the thirty-six buildings had an average payback of less than twenty years (LFI
2013). Figure 6 shows how the various requirements of buildings act as to sustainability. The
research also shows that the Living Building Challenge is also the only one among all the
mentioned requirements that examines the actual building performance after it is constructed and
27
put into function, rather than modeled or anticipated, performance (Living Future Institute staff,
interview). Therefore, projects must be operational for at least twelve consecutive months prior
to evaluation. It dramatically increases the chance that the buildings will keep going with their
sustainable operation.
The Living Building Challenge Standards
The facets of the Living Building Challenge are performance-based and position the ideal
outcome as an indicator of success. The compilation of imperatives can be applied to almost
every conceivable typology, or project type, such as a building (both renovation of an existing
Figure 6 Various Requirements of Buildings’ Performances as to Sustainability (The Living
Future Institute, 2013)
28
structure or new construction), infrastructure, landscape or community development. The
imperatives must be met for any type of project, at any scale, in any location (GRI 2013a, 5).
Naturally, strategies to create living landscapes, infrastructure, renovations, buildings or
neighborhoods will vary widely by occupancy, use, construction type and location, but the
fundamental considerations remain the same (GRI 2013a, 7).
As the Living Building Challenge projects seek to generate their own energy and collect
their own water, they more appropriately match scale to technology and end use, and result in
greater self-sufficiency. Yet, the ideal scale for solutions is not always within a project’s property
boundary. Depending on the technology, the optimal scale can vary when considering
environmental impact, first cost and operating costs. To address these realities, the Living
Building Challenge has a scale jumping overlay to allow multiple buildings or projects to operate
in a cooperative state – sharing green infrastructure as appropriate and allowing for various
typologies as possible.
Transects
To encourage proper development in specific settings, the standard draws on the work of
Duany Plater-Zyberk & Company, who created the new urbanism transect model for rural to
urban categorization. The living transect, which applies to several imperatives throughout the
Living Building Challenge, is an adaptation of the original transect concept. The Challenge
promotes the transition of suburban zones either to grow into new urban areas with greater
density, or be dismantled and repurposed as new rural zones for food production, habitat and
ecosystem services. Every project must select a living transect category from the following
options (LFI 2012, 8):
29
L1. Natural habitat preserve (Greenfield sites)
L2. Rural agriculture zone
L3. Village or campus zone
L4. General urban zone
L5. Urban center zone
L6. Urban core zone
The classification of transects does not affect the number of imperatives applied to each project.
However, different transects do have different standards of imperatives, such as floor area ratio
(FAR). For example, rural agriculture zone has FAR ≤ 0.09, while Urban Core Zone’s FAR ≥
3.0.
Typologies
Projects must identify the one of the four typologies: renovation, infrastructure +
landscape, building and neighborhood, that aligns with the project to determine which
Imperatives apply. Some typologies require fewer than twenty Imperatives because the
conditions are either not applicable or may compromise other critical needs. However,
participating teams are encouraged to integrate the optional imperatives into their projects
wherever possible.
Petals
The Living Building Challenge is composed of seven performance areas called petals,
which are subdivided into a total of twenty imperatives, each of which focuses on a specific
sphere of influence. The petals and imperatives are listed as follows:
30
Site
01: Limits to growth
02: Urban agriculture
03: Habitat exchange
04: Car free living
Water
05: Net zero water
06: Ecological water flow
Energy
07: Net zero energy
Health
08: Civilized environment
09: Healthy air
10: Biophilia
Materials
11: Red list
12: Embodied carbon footprint
13: Responsible industry
14: Appropriate sourcing
15: Conservation + reuse
Equity
16: Human scale + humane places
17: Democracy + social justice
18: Rights to nature
Beauty
19: Beauty + spirit
20: Inspiration + education
The Living Building Challenge certification is the only green building certification that is
based on actual, rather than modeled or anticipated, performance. Therefore, projects must be
operational for at least twelve consecutive months prior to evaluation. The performance-based
certification makes sure the building is acting sustainability, instead of designing one way and
performing the other (LFI 2012, 1).
Other Supporting Programs
The Living Building Challenge offers supplemental resources for participating projects
(LFI 2014c). Handy petal handbooks are prepared for subscribers and project teams pursing the
Challenge. The handbooks have been developed to clarify and consolidate the Living Building
Challenge rules to provide a unified reference for project teams.
31
The Living Building Challenge offers a forum of discussion on specific questions
regarding the imperatives. The forum, called dialogue, serves as a direct line for subscribers of
the community working on registered projects looking to consult with the Living Building
Institute's technical staff. Only subscribers with registered projects can post questions, but all
community subscribers can view questions and answers that have been posted (LFI 2014d).
The Living Building Challenge also provides technical assistance to developers and
education opportunities to the general public. Other resources not included in the Living
Building Challenge but part of the International Living Future Institute’s function are (but not
limited to): Trim Tab which serves as a community magazine, declare which offers Living
Building Challenge project teams a materials guide for product specification, and ambassador
network which offers opportunities for volunteers around the world to share up-to-date
sustainability information and promote their ideas. These programs complement the Living
Building Challenge toward the goal of sustainability. However, as these programs do not include
criteria to be integrated in triple bottom line reporting, this thesis only focuses on the Living
Building Challenge.
Bringing Living Building into Practice
Projects can achieve three types of certification: Full Certification, Petal Recognition or
Net Zero Energy Building Certification, depending on the number of petals that projects achieve
(LFI 2012). To date, thirteen projects have achieved certification through the Living Building
Challenge, and many others have entered the twelve-month operational phase required prior to
audit. Until May 2014, five buildings achieved full certification, four received petal ecognition,
32
and eight received net zero energy certification. It is worth mentioning at all full certification
projects are educational buildings. Bullitt Center, which is a commercial building designed for
full certification, is a breakthrough in Living Building Challenge practice.
The greenest commercial building Bullitt Center, is located in Seattle Capitol Hill’s
highly walkable Pike/Pine neighborhood (Bullitt Center 2014). With building features such as
solar panels, waterless toilets, greywater treatment, heavy timber structure and bike-friendly
design, the Center keeps up with Living Building Challenge petal requirements. The Center also
offers educational exhibits at the ground level of the building, and organizes tours to the building
regularly. The Bullitt Center is 80% leased by March 2014, with one floor still available. Once
the building is fully occupied, it can start the clock on Living Building certification, especially
the Water and Energy petals. The cost of Bullitt Center is roughly about 20-25% more than the
average of its type in the market, and it is leasing at a competitive market rate (Bullitt Center
Developer, interview). The Bullitt Foundation, owner of the Center, looks at the building’s long-
term benefits (Planning Director, interview). If the Bullitt Center turned out to be success, it is a
replicable role model in the construction and real estate sector and there will be more buildings
following the Living Building Challenge standards. This thesis researches into the contributions
of the Living Building Challenge to triple bottom line reporting, hoping to add value to the
significance of the Living Building Challenge, and to bring triple bottom line reporting to the
eyes of the developers and policy makers. The next chapter introduces how this research is
conducted.
33
METHODOLOGY
This research intends to answer the question: “how does the Living Building Challenge
help developers prepare their triple bottom line reporting?” The paper adopts comparative
analysis between the GRI Framework, the worldwide recognized triple bottom line reporting
framework, and the Living Building Challenge standards, sustainable building standards that
covers economic, environmental and social aspects. As the GRI Framework and the Living
Building Challenge have their own vocabulary of the whole systems and criteria, this thesis uses
the term framework(s) when referring to both systems, and the term criteria when referring to
standard disclosure of the GRI and imperatives of the Living Building Challenge.
When choosing data, this thesis adopts discriminate sampling, which chooses
interviewees and documents, frameworks and supplemental resources. The data chosen enhance
the possibility of comparative analysis to saturate categories and complete the study. Data for
analysis is draw from both standards, including the GRI Framework, Living Building Challenge
imperatives and its supplemental resources. GRI implementation manual and Living Building
Challenge petal handbooks are referred to in order to understand the definition of criteria.
Interviews are conducted as another research method, to gather information from professionals in
the built environment field. One limitation of the research method is that the Living Building
Challenge is still developing. The current Imperatives are not perfectly practiced by large-scale
buildings. The Bullitt Center is the only large-scale commercial building designed to meet all the
twenty imperatives. For this research, the latest version of the Living Building Challenge,
version 2.1, is used for analysis. Information from the petal handbooks and interviews are helpful
to gain the best understanding of the Living Building Challenge, and eliminate bias to the largest
extend.
34
The research question is broken down to six sub-questions: 1) What are the similarities or
differences of circumstances of applying the GRI Framework and the Living Building Challenge?
2) What are the similarities between the GRI Framework and the Living Building Challenge
criteria? In other words, what imperatives of the Living Building Challenge directly answer the
GRI Framework’s criteria? 3) What criteria of GRI are not included in the Living Building
Challenge? 4) What criteria does the Living Building Challenge put forward that are helpful to
triple bottom line reporting? 5) How instrumental are the Living Building Challenge
supplemental resources towards triple bottom line reporting? 6) Does compliance with the Living
Building Challenge contribute to the contents and quality of triple bottom line reporting?
To answer these questions, the thesis first proposes its hypothesis, and then compares the
two frameworks side-by-side, using all useful information from the frameworks, implementation
manuals, petal handbooks and interviews. The results are presented in the next chapter. The
concept diagram for the thesis is shown in figure 7.
Other
Supplement
Resources
Triple
Bottom Line
Reporting
Global
Reporting
Initiative
Standard
Disclosures
Reporting
Principles
Results
Living
Building
Challenge
Petals and
Imperatives
Typology and
Transect
Sustainability
Figure 7 Concept Diagram of Thesis Methodology
35
Hypothesis
Table 1 summarizes a comparison between the GRI Framework and the Living Building
Challenge on their contents. From the table we can see that the Living Building Challenge
appears to have one economic imperative, while it has nine for the social aspect and nine for the
environmental aspect. Table 1 shows that the Living Building Challenge emphasizes on the
environmental and social aspects, and the economic aspect is only slightly addressed in the
Living Building Challenge. The hypothesis of this paper is that the Living Building Challenge
contributes a lot to the social and environmental aspects, but little to the economic aspect, of
triple bottom line reporting.
Table 1 Comparison between GRI Framework and the LBC
GRI Framework
Criteria
LBC Imperatives Comments
Economic 14 Appropriate Sourcing Only one imperative is related to the
economic aspect. The Living Building
Challenge does not emphasize on
economy, although addressed.
Environmental 01 Limits to Growth
02 Habitat Exchange
04 Car Free Living
05 Net Zero Water
06 Ecological Water Flow
07 Net Zero Energy
11 Red List
12 Embodied Carbon Footprint
15 Conservation + Reuse
A total of nine imperatives belong to
environmental protection category.
Concerning there are only twenty
imperatives, the environmental
performance is a big part of the Living
Building Challenge.
Social 08 Civilized Environment
09 Healthy Air
10 Biophilia
13 Responsive Industry
16 Human Scale + Human Places
17 Democracy + Social Justice
18 Rights to Nature
19 Beauty + Spirit
20 Inspiration + Education
Nine imperatives belong to social
aspect. Similar to environmental aspect,
this is a huge part of the Living
Building Challenge.
36
Comparison between the GRI Framework and Living Building Challenge
Research Steps
This research tests the hypothesis by utilizing the two frameworks and interview
information. Research steps include: 1) Introduce how it judges similarity or difference. This
serves as guidance for later analysis. 2) Define the circumstance of application for both
guidelines, compare the difference of their applicable fields, and find their intersection. 3) Read
through the GRI guidelines, including the sector guidance for construction and real estate sector,
which is exactly the target group we focus, extract all the reporting criteria of GRI. Read and
synthesize the Living Building Challenge criteria. Compare the two sets of criteria and analyze
which imperatives of the Living Building Challenge can help developers create meaningful
information for their triple bottom line reporting. Contrast the two frameworks and find their
differences. 4) Discuss how the Living Building Challenge supplemental resources contribute to
reporting. 5) Discuss the Living Building Challenge’s contribution to the contents and quality of
triple bottom line reporting. The following sections describe how is each step conducted and
presents information gathered.
What is Similarity and Difference
This thesis regards criteria of the same subject, such as the amount of water consumed,
staff’s wages, and direct economic value generated, as comparable. If the subject of a Living
Building Challenge imperative is the same as its counterpart of the GRI Framework, and if by
achieving the imperative, the developer/ building operation manager can have numerical,
nominal, or descriptive data for triple bottom line reporting, the two criteria are considered
similar. Similarity includes four types: 1) if both the subjects of the criteria and the way they are
37
measured are the same, these two criteria are considered; 2) if the subjects of criteria are same,
and they are measured in different but interchangeable ways, they are considered similar. An
example might be electricity consumption yearly versus monthly; 3) normative criteria are
considered similar if they are of the same topic. For example, the GRI Framework requires
community education facilities, which is covered by Imperative 20 Inspiration + Education; and
4) if fulfilment of one imperative meets the best practice of a category in GRI practice, and
makes it unnecessary to file other criteria, the Living Building Challenge imperative is
considered similar to GRI criteria. One example is that by doing greywater treatment and reuse, a
building eliminates all the greywater it produces and there is no need to track its greywater
discharge. Other than circumstances mentioned above, criteria are considered different. Criteria
may be different in their subject or ways of measurement.
The Circumstances of Application
To understand both guidelines, this research first defines the circumstances of application
for the two guidelines. The research compares differences and commonalities of terms, target
groups, and the fields of application for each guideline, and tries to find differences and
similarities of the background for both guidelines to be adopted. The results are presented in the
next chapter.
Read, Compare and Contrast Living Building Challenge and the GRI Framework
This research summarizes fifty-eight general standard disclosures, ninety-two specific
standard disclosures, and twenty imperatives of the Living Building Challenge. For the purpose
of compare and contrast, this study scrutinizes all the criteria. The next step is to compare the
38
two, and to analyze which imperatives of the Living Building Challenge can help developers
create meaningful information for their reporting. In this step, imperatives of the Living Building
Challenge are studied against standard disclosures of the GRI.
Although the Living Building Challenge mostly provides data for the environmental
aspect, it indirectly contributes evenly to the general standards and to all three aspects. The
Living Building Challenge offer information about stakeholder disclosure, organization policy
and reporting period at general level for reporting. For specific standards on economic aspect, the
Living Building Challenge reveals how a project is significant to a local community, by bringing
job opportunities, purchasing local products, and offering services at local level. A Living
Building Challenge project also indirectly contributes to reporting of economic value generated,
health and wellbeing of a community and industry-side innovation. For environmental aspect, the
Living Building Challenge ensures habitat protection, water conservation and reuse, use of
healthy and environmental-friendly materials. All these imperatives offer indirect data that serve
as parts of criteria of the GRI Framework. The social aspect is also slightly addressed, for the
Living Building Challenge projects bring in the notion of health, beauty and equity.
This step also discusses Living Building Challenge criteria that are not included in the
GRI Framework, and sections from the GRI Framework that are not discussed in the Living
Building Challenge. The results are presented in the next chapter in the format of a table.
Function of Living Building Challenge Supplemental Resources
After scrutinizing the Living Building Challenge’s typologies, transects and imperatives,
this research changes the view to supplemental resources, which are indivisible parts of the
39
Living Building Challenge. The research tries to find out how the supplemental resources
complement the Challenge and assist company’s reporting. The results are presented in Chapter
4: Results.
Living Building Challenge’s Contribution to Report Content, Quality and Data Collection
Apart from standard disclosure mentioned above, GRI also mandates the organizations
meet Reporting principles to ensure the contents and quality of reporting. While the Living
Building Challenge, more like a bar for projects to research, it does not include a section
specifically on how to issue good reports of project performance. This thesis goes through the
Living Building Challenge criteria and supplement resources to invest whether and how the
Challenge as a whole supports the contents and quality of triple bottom line reporting, helps with
data collection, and improves the overall quality of reporting. The results are presented in
Chapter 4: Results.
Interviews
Interviews are conducted to gather supplementary information of the two guidelines and
ensure inclusiveness of the research. Interviewees include: the Living Building Challenge staff,
developer of the Bullitt Center, director of the Runstad Center for Real Estate Studies at the
University of Washington, director of the Department of planning and Development at city level,
and executive vice president of Craft 3, a self-defined triple bottom line non-profit organization.
This group of interviewees brings in resourceful and profound comments on triple bottom line
reporting and the Living Building Challenge from various perspectives such as academic, policy,
40
developer and triple bottom line organization, etc. Also there is no chapter specifically on the
interview outcome; this thesis keeps referring to their insights and comments. A list of interview
questions can be found in Appendix 3. Interview information is summarized in the following
chapter, which shows the results of analysis in detail.
41
RESULTS
This chapter displays results of analysis and answers the research question “how does the
Living Building Challenge prepare developers for the triple bottom line reporting”. The research
results test this paper’s hypothesis that the Living Building Challenge contributes a lot to the
social and environmental aspects, but little to the economic aspect, of triple bottom line reporting.
This chapter displays results of analysis. To clearly answer research sub-questions, this
chapter is organized into four parts. The first part describes the similarities or differences of
circumstances of applying the GRI Framework and the Living Building Challenge. The second
part is comparison between the two frameworks. It consists of similarities and differences of the
two frameworks, and tells what the Living Building Challenge lacks and what it adds on to the
GRI Framework. The third part is a discussion on supplemental resources of the Living Building
Challenge. The last part analyzes the Living Building Challenge’s overall contribution to the
contents and quality of triple bottom line reporting. All the Living Building Challenge
imperatives can be found in Appendix 2 and criteria of the GRI Framework in Appendix 4.
What Do Interviewees Say
The most prominent outcome of the interview is that all interviewees mentioned the
outstanding performance of the Living Building Challenge on the environmental aspect. The
economic aspect, however, suffers from doubt. All five interviewees noticed that the economic
performance is not of priority in the Living Building Challenge, while three of them mentioned
the high construction cost of Bullitt Center. Two interviewees suggest the social aspect of the
Living Building Challenge is different from what people usually think of the social bottom line.
42
They think the Living Building Challenge does not consider low-incomes, neither aims at
providing more local jobs or affordable housing. It is the case with the Bullitt Center, which is a
commercial building. However, the Imperative 17 Democracy + Social Justice actually requires
that “for the Neighborhood Typology, a minimum of 15% of housing units must meet an
affordable housing standard. (LFI 2012, 38)” One interviewee asserts that social equity is not the
major concern of the Living Building Challenge.
The Circumstances of Application
The GRI Guidelines have been developed through an extensive process involving
hundreds of reporters, report users and professional intermediaries from around the world.
Sustainability reporting helps organizations to set goals, measure performance, and manage
change in order to make their operations more sustainable. The GRI Guidelines conveys
disclosures on an organization’s impacts, which can either be positive or negative, on the
environment, society and the economy, assisting in understanding and managing the effects of
sustainability developments on the organization’s activities and strategy. The aim of G4 is to
help reporters prepare sustainability reports that matter, contain valuable information about the
organization’s most critical sustainability-related issues, and make such sustainability reporting
standard practice. G4 is designed to be universally applicable to all organizations, large and
small, across the world. Report formats varies, be they standalone sustainability reports,
integrated reports, annual reports, reports that address particular international norms, or online
reporting (GRI 2013a, 1).
43
The Living Building Challenge is a green building certification program launched by the
International Living Building Institute. The Challenge is an attempt to raise the bar of
sustainability in the built environment. The Living Building Challenge provides a guideline for
design, construction and the symbiotic relationship between people and all aspects of the built
environment, for all construction project forms such as a single building, a park, a college
campus or even a complete neighborhood community. The twenty imperatives must be met for
any type of project, at any scale, in any location around the world (GRI 2013a, 5).
The GRI Framework is designed for organizations to do performance reporting, while the
Living Building Challenge is designed for building projects to meet certain standards. However,
for developers and property managers, these distinctions are less important, in cases where
building projects are the products or services. The data gained from performance of their
products are applicable for compiling their organizational performances.
The GRI Framework is prepared for all organizations in the industry, no matter how
sustainable they are. Meanwhile, the Living Building Challenge is prepared for pioneering
sustainable projects that meet high level of sustainability. Thus, the different levels of
sustainability practice and subject of reporting lessens the value of comparison. Even though the
standards are high, the Living Building Challenge is the only system that considers all three
components, thus, making it the best option for comparison.
The final difference is the duration of reporting. The Living Building Challenge examines
building performance after twelve consecutive months of operation. After issuing the
certification, the Living Building Institute does not keep tracking the performance of the building.
As the Living Building Institute staff puts: “if a building performs well, I cannot see why people
44
do not keep up with the good performance. (Living Future Institute staff, interview)” For contrast,
the GRI Framework proposes regular reporting, often mentioned as annual reporting. This
requires developers and property managers to keep track of the building performance every year.
While this is not compulsory in the Living Building Challenge, as long as the data tracking
system is installed in the buildings as the Bullitt Center does, the data are easily accessible.
Comparison between the Living Building Challenge and the GRI Criteria
Similar Criteria
Table 2 below shows the comparison in detail. The buildings that meet the Living
Building Challenge are not highly profitable, comparing to their comparatives on the market.
Thus, most developers or property owners adopting the Living Building Challenge are those who
have sustainability imbedded in their vision. If a project is decided to be built to meet the Living
Building Challenge, it means that the property owner and the developer are taking a step toward
sustainable buildings/projects. The adoption of the Living Building Challenge allows the
organization to better clarify their strategy of sustainability on the GRI Framework item G4-1.
Living Building Challenge makes great contribution on reporting the environment aspect.
The imperatives meet the reporting guideline’s requirement on sourcing from local markets,
selecting materials and engaging suppliers, utilizing preferred or prescribed lists of products and
materials. As shown in comparison item 3 in table 2 on page 46, Imperative 07 is a great
resource responding G4-EN3, G4-EN6 and G4-EN7 on energy consumption. By using data of
sum of annual kWh energy consumption and sum of floor area or number of people, the
imperative helps to calculate Building Energy Intensity.
45
Water is another important element in the Living Building Challenge which contains
water Imperatives 05 Net Zero Water and 06 Ecological Water Flow. As shown in comparison
item 4, G4-EN8, G4-EN9, G5-EN10 and all the additional disclosure requirements under these
three standards, about reporting water usage by sources, are met. Data for calculating building
water intensity (sum of annual litters of water consumption over sum of floor area or number of
persons) is collected. The data assists the report of G4-EN22 Total Water Discharge by Quality
and Destination.
Imperative 01 on limits to growth answers to G4-EN11 shown in comparison item 5. This
imperative is useful to providing issuers with information on geographic location, land
ownership, protected area in, around, or adjacent to the site, type of operation of the project, size
of operational site, biodiversity value, and listing of protected status. Imperative 01 also provides
information about habitat conservation, which is one piece of information required by G4-EN12
shown in comparison item 5.
Imperative 12 on carbon footprint partly answers G4-EN15 shown in comparison item 6.
The data may also be valuable when applied to G4-EN16, G4-EN17 AND G4-EN18, depending
on how the organization defines indirect emission. Again, the carbon footprint data is valuable to
calculate greenhouse gas emissions intensity from buildings (sum of annual kilograms CO2
equivalent over sum of floor area or number of people) and greenhouse gas emission intensity
from new construction and redevelopment activity (sum of annual CO2 equivalent emissions
over sum of annual turnover from the construction activities). However, the imperative does not
include greenhouse gases other that CO2.
46
What worth noting is that the sector disclosure demands organizations to report type and
number of sustainability certification, rating and labeling schemes for new construction,
management, occupation and redevelopment. If a developer or a property manager adopts the
Living Building Challenge and meets the Imperatives, the certification they receive will meet
this standard and add credit to the report.
Table 2 GRI Framework and LBC Criteria Comparison
Comparison
Item Number
GRI Disclosure LBC Imperatives Similarities
1 G4-EN2 Percentage of
Materials Used That Are
Recycled Input
Materials.
Imperative 15 requires a
project team to strive to
reduce or eliminate the
production of waste
during design,
construction, operation
and end of life phases.
The team must divert
wasted material to a
certain percentage
during construction.
The percentage of
diverted wasted material
helps the developer to
offer data on G4-EN2
2 Additional disclosure
requirements under G4-
EN2 require the
percentage of materials
recycled by significant
categories of raw
materials, renewable
materials, and
manufactured products.
Imperative 15 breaks
down materials to
metals, paper and
cardboard, soil and
biomass, rigid foam,
carpet and insulation,
and all others
The categorization fits in
well with that of the GRI
Framework.
3 G4-EN3 Energy
Consumption within the
Organization, especially
the additional disclosure
requirements right after,
with an emphasis on
reporting production of
electricity from
renewable resources.
G4-EN6 Reduction of
Energy Consumption
and the related
Imperative 07 mandates
net zero energy, which
means that one hundred
percent of the project’s
energy need must be
supplied by on-site
renewable energy on a
net annual basis.
Imperative 07 answers to
G4-EN3, G4-EN6 and
G4-EN7. In the
meanwhile, the Bullitt
Center keeps track of
real-time energy
consumption and
production from its solar
panels.
47
additional disclosure
requirements on energy
savings for all assets.
G4-EN7 Reductions in
Energy Requirements of
Products and Services.
4 G4-EN8 Total Water
Withdrawal by Source,
G4-EN9 Water Sources
significantly affected by
withdrawal of water,
G4-EN10 Percentage
and Total Volume of
Water Recycled and
Reused.
Imperative 05 requires
net zero water of the
project, and Imperative
06 demands ecological
water flow that one
hundred percent of storm
water and used, project
water must be managed
onsite to feed the
project’s internal water
demands or released
onto adjacent sited for
management through
acceptable method.
The LBC monitors the
amount of rainwater
collection, waste water
treatment, reuse and
discharge. These data
directly answers to G4-
EN8, G4-EN9 and G4-
EN10
5 G4-EN11 on operational
site location, size, and
biodiversity value
G4-EN12 on the nature
of significant direct and
indirect impacts on
biodiversity
Imperative 01 Limits to
Growth requires the
project to locate certain
distance away from
sensitive ecological
habitats such as wetlands
and prime farmland.
Information from
Imperative 01 can be
applied to G4-EN11.
Habitat conservation of
Imperative 01 partly
meets G4-EN12.
6 G4-EN15 Direct
Greenhouse Gas
Emissions, including
reporting gross direct
GHG emissions in
metric tons of CO2
equivalent
Imperative 12 requires
the project to account for
the total footprint of
embodied carbon from
its construction through
a one-time carbon offset
tied to the project
boundary.
The carbon footprint
data partly meets G4-
EN15, especially on
reporting gross direct
GHG emissions in
metric tons of CO2
equivalent, and reporting
biogenic CO2 emissions
in metric tons of CO2
equivalent separately
from the gross direct
GHG emissions.
All above-mentioned criteria are ones that the Living Building Challenge offer direct data
to assist reporting. The data put much more emphasize on the environmental aspect of reporting.
Another contribution of the Living Building Challenge on the GRI reporting is that when
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adopting the sustainability techniques of the Living Building Challenge, reaching the
requirements of the Living Building Challenge, and preparing Living Building Challenge reports,
the organizations are gathering necessary information for the GRI reporting. For example, since
the Living Building Challenge requires healthy air, sunlight, and nature waterways for any
member of society or adjacent developments. By accomplishing these imperatives, organizations
are able to announce they take the sustainability impact on stakeholders into account, as required
by GRI Framework’s G4-2. Another example is that although it is not included in imperatives, a
project’s Living Building Challenge report may still include information about its
developer/owner’s basic information, which is applicable to the GRI organizational profile (G4-3
to G4-16) and additional disclosure requirement of the sector, such as gross leasable area and
vacancy rate. Table 3 summarizes imperatives that indirectly contribute to triple bottom line
reporting.
Table 3 Indirect Contributions of the Living Building Challenge to the GRI Framework
Comparison
Item
Number
GRI Disclosure LBC Imperatives What the Living
Building Challenge
Imperative Can
Contribute
7 G4-24 additional
disclosure requirements
on stakeholder disclosure
The LBC as a whole Involving the building
project team and tenants
as stakeholders
8 G4-28 on reporting
period
No specific imperatives
applied. The LBC
requires the building to
keep its performance for
at least twelve
consecutive months; the
electricity and water
reuse data are reported
annually
The twelve-month
observation period
ensures the building at
least provides data for
one year. Electricity and
water reuse data can be
used for reporting every
year.
9 G4-33 on organization’s
policy and current
practice with regard to
seeking external
No specific imperatives The Living Building
Institute is an external
assurance to ensure the
truthfulness and
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assurance for the report credibility of reported
performance
10 G4-EC1 on data about
direct economic value
generated (revenues),
and economic value
distributed (operating
costs and payments to
government)
The LBC Imperatives 05
Net zero water, 06
Ecological water flow
and 07 Net zero energy,
buildings calculate their
operating costs and
revenues from electricity
sold to the government
Fulfillment of
Imperatives 05, 06 and
07 provides data that can
be applied to calculating
operating costs and
revenues from electricity
11 Community investments’
G4-DMA Additional
Guidance on the content
of improved community
health and wellbeing by
adopting healthy
environment
requirements.
Imperatives 08 Civilized
Environment, 09 Health
Air, and 10 Biophilia
A building meeting the
health and equity petals
offer a healthy living and
working environment for
the tenants, and a
healthy, accessible public
space for the community.
12 G4-EC7 reports the
extent of development
and impact of
infrastructure
investments and services
supported; it also reports
the current or expected
impacts on communities
and local economies.
G4-EC9 Proportion of
Spending on Local
Suppliers at Significant
Locations of Operation
Imperative 14
Appropriate Sourcing
advices the project
contribute to local
economy and choose
sourcing locations for
materials and services
within certain distances.
Imperative 14 calls for
projects’ contribution to
local economy.
Information of an
infrastructure project, or
the infrastructure part of
a project explains
significant infrastructure
investments made by the
reporting organization in
relation to the following:
Affordable and
social housing;
Preservation and
restoration of
historic assets;
Publicly
accessible
open/recreation
space; and
Community
education and
health facilities.
13 G4-EC8 on significant
indirect economic
impacts.
Additional disclosure
No specific imperatives The LBC imperatives
ensure a healthier space
for the tenants and the
public. This echoes to
criteria:
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requirements on enabling
industry-wide innovation
and increased
productivity in the
medium- to long-term,
through technology
transfer and research and
development.
Economic impact
of improving or
deteriorating
social or
environmental
conditions;
Availability of
products and
services for those
on low incomes;
Economic impact
of the use of
products and
services;
The impacts in
the context of
external
benchmarks.
The LBC is also an
avant-garde practice of
sustainable building in
the industry, which may
bring in industry-wide
renovation.
14 G4-EN13 Habitats
Protected or Restored
Imperative 03 Habitat
Exchange
The Imperative may
offer detailed
information for habitat
exchange, depending on
project properties
15 G4-EN23 Total Weight
of Waste by Type and
Disposal Method
Imperative 15
Conservation + Reuse
records the total weight
of hazardous and non-
hazardous waste, by the
following disposal
methods: such as reuse
and recycling of waste
water, and how the waste
water disposal methods
has been determined
As the classification of
waste for the two
frameworks is different,
the LBC answers part of
the items listed by the
Standard
16 G4-EN32 on the
percentage of new
suppliers that were
screened using
environmental criteria
Imperative 14
Appropriate Sourcing
and Imperative 11 Red
List
The LBC keeps tracking
material suppliers among
all the suppliers, to meet
the materials petal. Any
new material suppliers
screened using
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environmental criteria
can be reported. Here the
environmental criteria
refer to the red list items
offered by the Living
Building Institute.
17 G4-PR1 to report the
percentage of significant
product and service
categories for which
health and safety impacts
are assessed for
improvement
No specific imperatives Projects can be
considered as products
produced by developers,
and management is
services offered by
property managers. As
long as a project meets
the LBC during design,
construction and
operation, it can be
considered as significant
product and service for
which health impacts are
assessed.
18 Social aspect additional
disclosure requirements:
report quantifiable
positive legacy impacts
and quantifiable impacts
from a pre-development
benchmark, and disclose
improvements over time.
Health, beauty and equity
Petals
A LBC project that meets
the Imperatives usually
offers healthy, natural,
walkable space for the
tenants, ensures public
accessibility and
beautiful public arts,
offers inspiring education
on sustainability and tries
to bring in wellbeing for
low-incomes in the
projects. These are
positive legacy impacts
that worth reporting.
GRI Criteria not Included in the Living Building Challenge
Apart from the similarities mentioned above, there are differences. Most of general
standard disclosures, which are fundamental in the GRI Framework, are not addressed at all
in the Living Building Challenge. For specific standard disclosures, the economic and
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environmental aspects are partly addressed. The social aspect of the GRI Framework is
comprehensive and the Living Building Challenge almost does not respond to any of the
criteria. Below is a list of GRI Framework criteria that does not appear in the Living Building
Challenge:
General standard disclosures - identified material aspects and boundaries, governance,
ethics and integrity
Specific standard disclosures - disclosures on management approach
o Economic: market presence
o Environment: transport, environmental grievance mechanisms
o Social: employment, labor/management relations, occupational health and safety,
training and education, diversity and equal opportunity, equal remuneration for
women and men, supplier assessment for labor practices, labor practices
grievance mechanisms, investment, non-discrimination, freedom of association
and collective bargaining, child labor, forced or compulsory labor, security
practices, indigenous rights, assessment, supplier human rights assessment,
human rights grievance mechanisms, local communities, anti-corruption, public
policy, anti-competitive behavior, compliance, supplier assessment for impacts on
society, grievance mechanisms for impacts on society, product and service
labeling, marketing communications, customer privacy and compliance
53
Living Building Challenge Criteria not Mentioned in the GRI Framework
Unlike the hypothesis that there is only one imperative not shown in the GRI Framework,
there are seven imperatives not applied to the GRI Framework. They belong to site, health,
materials and equity petals. They are:
02: Urban Agriculture. The GRI Framework does not include any information about
creating opportunity to get close to agriculture.
04: Car Free Living. Although reduced vehicle use contributes to the decline of
greenhouse gases emission, the Living Building Challenge does not calculate the exact
decrease of CO2 that is caused by the car free living imperative. The aim of the
imperative, however, is to offer a walkable, pedestrian-oriented community. This is why
the imperative is not mentioned in the GRI Framework.
10: Biophilia. Although the good intension of the imperative is to bring people closer to
nature, it is, according to the analysis of the GRI Framework, not in the scope of social
aspect of the GRI Framework.
13: Responsible Industry. The GRI Framework does not mention or advocate for the use
of raw materials.
16: Human scale + Human Places. Human scale does not fall in to the scope of the GRI
Framework.
18: Rights to Nature. Although access to fresh air and sunlight is related to health element
of the GRI Framework, the idea of rights to nature is not part of the GRI Framework.
19: Beauty + Spirit. This element does not appear in the GRI Framework
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Although imperatives 10 Biophilia and 19 Beauty + Spirit are mentioned as indirect
contribution to triple bottom line reporting, the main ideas of the two Imperatives are not
addressed in any standard at all. This is the reason that they are considered as not shown in the
GRI Framework.
Function of Living Building Challenge Supplemental Resources
The Living Building Challenge offers supplemental resources for participating projects.
Resources include: the dialogue, petal handbooks, declare, technical assistance, Living Building
Challenge education, and research (LFI 2014c).
The dialogue is an online space for the transparent exchange of ideas between project
teams and the Institute. It is the official venue to request feedback on proposed strategies for
meeting the requirements of the Living Building Challenge. While only active and registered
project teams can submit requests to the dialogue, final published requests and responses are
available to all Living Building Challenge community subscribers. The dialogue provides
organizations with the flexibility to get information most relevant to their work, such as in-depth
commentaries, compliance paths, clarifications and temporary exceptions.
Petal handbooks compile technical information, including definitions, clarifications and
exceptions, contained within the Dialogue into concise, printable documents. The site, water and
materials petal handbooks are currently available online, and there will be a dedicated handbook
for each petal.
55
Declare aims to improve transparency and open communication of the marketplace by
providing manufacturers and specifics of building materials with a clear, elegant and informative
‘nutrition-label’. Declare has been enriched during the construction of the Bullitt Center.
To help project teams technically succeed in fulfilling the imperatives, the Institute
supports a project team’s process of adopting the principles of the Challenge by offering optional
services that provide practical knowledge.
In addition to the technical support offered by the tools and resources listed above, the
Living Building Challenge also offers educational opportunities. The flagship event is a full-day
public workshop called Understanding the Living Building Challenge.
According to the Living Building Challenge (LFI 2014c) and a planning director
(Director of the Planning Department, interview), the biggest barriers to accomplishing a Living
Building Challenge building, as many innovative project teams have found, is regulatory and
financial structures. The barriers can make it difficult to implement ecologically wise building
practices that advance public health and enhance the long-term resiliency of the built
environment. In responding to the barriers, the institute is implementing research and advocacy
agendas.
Living Building Challenge’s Contribution to Overall Reporting Contents and Quality
After comparing the two sets of criteria, this research examines how the Living Building
Challenge meets the principles for defining report context and principles for defining report
quality. The developer or property manager invites designers to design sustainable buildings,
suppliers to provide local, non-toxic materials, tenants to use the building sustainably and follow
56
certain rules (e.g. free car use), the general public to share the public space, and perhaps the low-
incomes to live in the building. These are inevitable stakeholders for a developer or property
manager to do triple bottom line reporting. With the attainment of the Living Building Challenge
certificate, the developer or property manager naturally involve these stakeholders. Sustainability
data disclosed when filing Living Building Challenge can be used for some criteria required by
the GRI Framework, to contribute to the sustainability context, materiality and completeness of
the report.
There are six principles on report quality: balance, comparability, accuracy, timeliness,
clarity and reliability. Balance requires reporting both positive and negative information of the
organization. The Living Building Challenge, as a performance bar, only records positive
sustainability information. As the Living Building Challenge is a one-time certificate, it does not
require projects to report its sustainability data regularly after certificating. However, as with the
case of Bullitt Center, the building has a system to monitor its real time sustainability
performance, especially data of water and energy, it is fairly easy for the property manager to
keep track of the data and report them periodically. Some direct, numeric data from Living
Building Challenge are ready to use in triple bottom line reporting. These data meets the
accuracy required by the GRI Framework. This is also the case with timeliness and clarity, for
the numeric data on water, energy and waste are easy to collect in time, while other qualitative
data are a one-time fulfillment that the Living Building Challenge does not keep track of, and
does not report following some hard standard. For example, the Living Building Challenge
requires Imperative 19: Beauty + Spirit. This imperative is illustrated as: the project must contain
design features intended solely for human delight and the celebration of culture, spirit and place
appropriate to its function. However, the definition of the above mentioned terms are vague and
57
open to interpretation. In terms of reliability, this research believes that since the Living Building
Institute is a third part independent from developers, property owners or property managers, the
data examined and disclosed by the Institute is reliable. Meanwhile, projects work with the city
governments on selling and buying electricity, which once again, ensures the credibility.
The Living Building Challenge also requires projects to report which transects and
typology they belong to. The classification of transects and typology influences the categories of
data each project reports. However, it does not influence the contents or quality of the report.
Table 4 below shows how principles for defining report content and quality are met by the
Living Building Challenge. If the Living Building Challenge contributes to one principle
considerably, it is marked as “+”, but if the influence of the Living Building Challenge on one
principle is negligible, or the Living Building Challenge clearly does not contribute to the
principle, it is marked as “--”. If one principle is not particularly addressed by the Living
Building Challenge, but the Living Building Challenge still turns out to contribute to it, the
principle is marked as “+--”.
Table 4 Living Building Challenge's Contribution on Reporting Content and Quality
Reporting Content Reporting Quality
Stakeholder
Inclusiveness
+ Balance --
Sustainability Context
+ Comparability --
Materiality
+-- Accuracy +--
Completeness
+-- Timeliness +--
Clarity
+--
Reliability
+
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The research results test this paper’s hypothesis that the Living Building Challenge
contributes a lot to the social and environmental aspects, but little to the economic aspect, of
triple bottom line reporting. According to the results, the Living Building Challenge contribute
moderately to social and economic aspects of triple bottom line reporting, as the Challenge offers
indirect data for the two aspects. The results justify that the Living Building Challenge directly
contributes a lot to the environmental aspect. The next chapter discusses the findings based on
comparative analysis and interview information mentioned in this chapter.
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DISCUSSION
The comparison of the two frameworks shows that direct data from the Living Building
Challenge does not contribute to the economic and social aspects of triple bottom line reporting.
However, the Living Building Challenge indirectly contributes to reporting on the economic
aspect more than interviewees reported. The major contribution of the Living Building Challenge
on the economic aspect comes in the form of reporting on various projects’ local economic
contributions. This coincides with the economic dimension of the GRI Framework, which deals
with the organization’s impacts on the economic conditions of its stakeholders and on economic
systems at local, national, and global levels. It does not focus on the financial condition of the
organization (GRI 2013a, 4).
The social aspect of the Living Building Challenge is different from that of the GRI
Framework. The Living Building Challenge emphasizes on providing a healthy and natural
environment, human-scale projects, beautiful arts, fresh air and natural day light, and also social
equity for the public by offering public infrastructure, public space, education materials for the
public, and low-income housing. However, the social aspect of the GRI Framework focuses
more on employee benefits such as wage, health, opportunities to convocation and bargain,
education opportunities, equality between genders, etc. Although different, both of them fall into
triple bottom line’s definition of social equity mentioned by Elkington as “(social equity) in the
form of public health, skills and education. But it also must embrace wider measures of a
society’s health and wealth-creation potential. (Elkington, John. 1998, 85)”
The Living Building Challenge was inspired by the notion of biomimicry and developed
the idea of integrating technology with nature. (Berkebile and McLennan 2004). Thus, the Living
Building Challenge has a high standard for its environmental aspect. The environmental data of
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the Living Building Challenge is valuable for reporting water usage, treatment and reuse, CO2
emission, energy use and savings, waste treatment, and land conversation. The Living Building
Challenge has much stricter environmental requirements than the GRI Framework and the data
collected is of good-quality and high performance. This means that as long as a project meets
Living Building Challenge imperatives, the data of the project can be used for triple bottom line
reporting. It should be noted that the first-hand data reveals projects’ performance, not
organizations’ performance. Developers or property managers can use these data for the
companies’ triple bottom line reporting.
The Living Building Challenge provides great indirect data on project performance,
which can be referred to by triple bottom line reporting issuers. Unlike direct data, indirect data
also offer useful information on organizations’ overall sustainability practice, economic impact
and social influences. This information together with Living Building Institute’s supplemental
resources, which focus on information sharing and project team education, ensures that triple
bottom line reporting is more resourceful and balanced. The Living Building Challenge brings in
stakeholders such as building’s tenants and local communities. This stakeholder involvement
coincides with the central element of CSR, a concern with stakeholders, which is also inevitable
in triple bottom line (Henriques and Richardson 2004, 27). The Living Building Challenge is
designed for projects of any scale and constructed by any construction firms. After gaining all
above-mentioned direct and indirect data, construction firms and property management firms,
big or small, are ready to do triple bottom line reporting as long as their projects pursue the
Living Building Challenge. This makes up for the current situation that large multinational firms
do more triple bottom line reporting than small local firms (Henriques and Richardson 2004, 10).
According to interviews, by doing Living Building Challenge projects, construction firms and
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property management firms gain benefits such as reported environmental visibility of the firm,
publicized active sustainability management, increasing reputation or brand, ethical
considerations, employee motivation and innovation and learning (KPMG 2011, 19).
Future studies may look at triple bottom line reporting at the small company level to
bring triple bottom line reporting together with firms in the real estate industry. Another field to
explore is the possibility of generating direct economic and social data from the Living Building
Challenge. Although economic and social aspects are not the original intention of the Living
Building Challenge, they are inevitable parts of the Living Building Challenge. If more
economic and social data is included in the Living Building Challenge, the Living Building
Challenge itself is one step closer to sustainability.
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CONCLUSION
This thesis answered the research question of how the Living Building Challenge helps
developers and property managers to prepare for their triple bottom line reporting. The Global
Reporting Initiative’s G4 Framework (GRI Framework) is used as guidance for triple bottom line
reporting in this paper. Research findings are summarized in table 5 below, which shows how
each petal contributes to the three aspects of triple bottom line reporting and reporting contents
and quality. If a petal offers direct data or covers most of the information required by an aspect,
the contribution is considered “high”. If a petal offers indirect data which is closely related to
reporting, or the petal provides part of the required information of an aspect, it is considered of
“medium” use. Finally, if a petal offers indirect data which slightly addresses the GRI
Framework or several imperatives of the petal is not mentioned in the GRI Framework at all, the
relationship between the petal with triple bottom line reporting is considered “low”.
Table 5 Living Building Challenge’s Contribution to Triple Bottom Line Reporting
Petals Economic
Aspect
Social
Aspect
Environmental
Aspect
Reporting
Contents
Reporting
Quality
Site Low Low Medium _ _
Water Medium Low High _ _
Energy Medium Low High _ _
Health Medium Medium Medium _ _
Materials Medium Low High _ _
Equity Low Medium Low _ _
Beauty Low Medium Low _ _
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Supplemental
Resources
Low High Low _ _
Overall Medium Medium High Medium Medium
The results of this paper show that the Living Building Challenge is very strong in the
environmental aspect. Because they meet the imperatives, projects possess high-performance
data for environmental reporting. The economic and social data fall behind in their value, clarity,
and accuracy. However, the social and economic imperatives enhance each project’s
performance, and they provide valuable information for reporting. Accompanied by
supplemental resources of the Living Building Challenge, projects registering for Living
Building Challenge still have a great chance to get the technology and education. In sum, the
Living Building Challenge contains an integrated concern of triple bottom line, displaying more
weight on the environmental aspect. The Living Building Challenge provides organizations with
valuable direct and indirect data for reporting the three bottom lines separately, and for report as
a whole, while their environmental data is of the most value. The Living Building Challenge also
contributes to completeness and quality of triple bottom line reporting. The Living Building
Challenge imperatives offer direct and indirect data for reporting and bring together stakeholders.
For developers and property managers, who pursue economic benefits from their business, handy
data provided by their projects are convenient resources to do triple bottom line reporting.
Both the GRI Framework and the Living Building Challenge have triple bottom line
thinking imbedded in their original idea and structure. While both frameworks are in their
infancy, this research brings the two sets together and shows their commonalities and differences.
With the popularity of sustainability buildings, the construction and real estate sector will see the
64
benefits of a regular triple bottom line reporting, for it allows a checklist for companies to track
their performance on sustainability, add weight to their vision, build a good public image, and
potentially bring positive economic return for them. The Living Building Challenge, which now
draws much attention, contributes to a large part of triple bottom line reporting for companies.
Since sustainability is a world-wide trend and the Living Building Challenge provides techniques
and support for completing a sustainable project, if a building decides to pursue the Living
Building Challenge, the developer and operator or the building are suggested to think about
issuing a triple bottom line report as their excellent project already prepares it to do so.
65
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Appendix 1: Definitions of Key Terms of the GRI Framework
Aspect: The word Aspect is used in the Guidelines to refer to the list of subjects covered
by the Guidelines.
General Standard Disclosures: General Standard Disclosures offer a description of the
organization and the reporting process.
Impact: In the Guidelines, unless otherwise stated the term ‘impact’ refers to significant
economic, environmental and social impacts that are: positive, negative, actual, potential, direct,
indirect, short term, long term, intended, unintended.
Material Aspects: Material Aspects are those that reflect the organization’s significant
economic, environmental and social impacts; or that substantively influence the assessments and
decisions of stakeholders. To determine if an Aspect is material, qualitative analysis, quantitative
assessment and discussion are needed.
Reporting Principle: Concepts that describe the outcomes a report should achieve and that
guide decisions made throughout the reporting process, such as which Indicators to respond to,
and how to respond to them.
Specific Standard Disclosures: Specific Standard Disclosures offer information on the
organization’s management and performance related to material Aspects.
Stakeholders: Stakeholders are defined as entities or individuals that can reasonably be
expected to be significantly affected by the organization’s activities, products, and services; and
whose actions can reasonably be expected to affect the ability of the organization to successfully
implement its strategies and achieve its objectives.
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Appendix 2: Living Building Challenge Criteria
Typologies: Renovation, Landscape or Infrastructure, Building and Neighborhood
Transect: L1 Natural Habitat Preserve, L2 Rural Agriculture Zone, L3 Village or Campus Zone, L4
General Urban Zone, L5 Urban Center Zone and L6. Urban Core Zone
Petals
Site
01: Limits to Growth
02: Urban Agriculture
03: Habitat Exchange
04: Car Free Living
Water
05: Net Zero Water
06: Ecological Water Flow
Energy
07: Net Zero Energy
Health
08: Civilized Environment
09: Healthy Air
10: Biophilia
Materials
11: Red List
12: Embodied Carbon Footprint
13: Responsible Industry
14: Appropriate Sourcing
15: Conservation + Reuse
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Equity
16: Human Scale + Humane Places
17: Democracy + Social Justice
18: Rights to Nature
Beauty
19: Beauty + Spirit
20: Inspiration + Education
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Appendix 3: Interview Questions
1. What is triple bottom line by Craft 3’s definition?
2. How does Craft 3 do triple bottom line accounting?
3. How does Craft 3 measure thing that are hard to measure?
4. Did you see any difficulties to do triple bottom line accounting?
5. By looking at the Living Building Challenge Petals, do you think it is triple bottom line? What
aspects are stronger or weaker?
6. What is the current situation of the Bullitt Center (by March 7th)?
7. What are the differences and similarities between the Living Building Challenge and LEED?
How does the Living Building Challenge win against LEED?
8. Is there detailed implementation information for Petals?
9. Does it concern about people with low-incomes, local job opportunities and other equity issues,
and how?
10. Based on your experience with the real estate industry and the academia, how do you
evaluate and comment on the Living Building Challenge?
11. Do you think triple bottom line accounting can promote sustainability?
12. Do you think it is practical for developers to do triple bottom line accounting? If not, why?
13. Do you think that the Bullitt Center is replicable?
14. How is the Center operated and leased?
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15. How profitable the Bullitt Center is? Does it break the owner’s economic bottom line?
16. As a tenant, how do you feel about this building? Is your experience of working in the
building pleasant?
17. Would you think it is possible for developers, especially sustainable building developers, to
do triple bottom line reporting?
18. What are the policy difficulties during construction of Bullitt Center?
19. How does the Bullitt Center perform in terms of the economic, social and environmental
bottom lines?
20. From policy perspective, is it possible to promote triple bottom line reporting? What if triple
bottom line reporting is compulsory?
21. Are there any other triple bottom line standards or practices in the field at local level?
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Appendix 4: G4 Sustainability Reporting Framework Criteria
Principles for Defining Report Content
Stakeholder Inclusiveness Principle: The organization should identify its stakeholders,
and explain how it has responded to their reasonable expectations and interests.
Sustainability Context Principle: The report should present the organization’s
performance in the wider context of sustainability.
Materiality Principle: The report should cover Aspects that reflect the organization’s
significant economic, environmental and social impacts, or substantively influence the
assessments and decisions of stakeholders.
Completeness Principle: The report should include coverage of material Aspects and their
Boundaries, sufficient to reflect significant economic, environmental and social impacts, and to
enable stakeholders to assess the organization’s performance in the reporting period.
Principles for Defining Report Quality
Balance Principle: The report should reflect positive and negative aspects of the
organization’s performance to enable a reasoned assessment of overall performance.
Comparability Principle: The organization should select, compile and report information
consistently. The reported information should be presented in a manner that enables stakeholders
to analyze changes in the organization’s performance over time, and that could support analysis
relative to other organizations.
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Accuracy Principle: The reported information should be sufficiently accurate and detailed
for stakeholders to assess the organization’s performance.
Timeliness Principle: The organization should report on a regular schedule so that
information is available in time for stakeholders to make informed decisions.
Clarity Principle: The organization should make information available in a manner that is
understandable and accessible to stakeholders using the report.
Reliability Principle: The organization should gather, record, compile, analyze and
disclose information and processes used in the preparation of a report in a way that they can be
subject to examination and that establishes the quality and materiality of the information.
General Standard Disclosures
Strategy and Analysis
G4-1 Provide a statement from the most senior decision-maker of the organization about
the relevance of sustainability to the organization and the organization’s strategy for addressing
sustainability.
G4-2 Provide a description of key impacts, risks, and opportunities.
G4-3 Report the name of the organization.
G4-4 Report the primary brands, products, and services.
G4-5 Report the location of the organization’s headquarters.
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G4-6 Report the number of countries where the organization operates, and names of
countries where either the organization has significant operations or that are specifically relevant
to the sustainability topics covered in the report.
G4-7 Report the nature of ownership and legal form.
G4-8 Report the markets served.
G4-9 Report the scale of the organization, including total number of employees, total
number of operations, net sales or net revenues, total capitalization broken down in terms of debt
and equity, quantity of products or services provided, additional disclosure requirements, report
additional information, for example, gross lettable area for assets under construction and
management and vacancy rate.
G4-12 Describe the organization’s supply chain.
G4-15 List externally developed economic, environmental and social charters, principles,
or other initiatives to which the organization subscribes or which it endorses.
Report Profile
G4-28 Reporting period for information provided.
G4-33 Report the organization’s policy and current practice with regard to seeking
external assurance for the report.
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Specific Standard Disclosure
Category: Economic
Aspect: Economic Performance
G4-EC1 Direct Economic Value Generated and Distributed
Aspect: Indirect Economic Impacts
G4-EC7 Development and Impact of Infrastructure Investments and Services Supported
Additional disclosure requirements: Explain significant infrastructure investments made
by the reporting organization in relation to affordable and social housing, preservation and
restoration of historic assets, publicly accessible open/recreation space, and community
education and health facilities.
G4-EC8 Significant Indirect Economic Impacts, Including the Extent of Impacts
Aspect: Procurement Practices
G4-EC9 Proportion of Spending on Local Suppliers at Significant Locations of Operation
Category: Environmental
Aspect: Materials
G4-EN2 Percentage of Materials Used That are Recycled Input Materials
Additional disclosure requirements: Include reused input materials as part of the
percentage of recycled input materials used to manufacture the organization’s primary products
and services. Break down the percentage of materials used that are recycled and reused input
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materials by significant categories of raw materials, renewable materials and manufactured
products.
Aspect: Energy
G4-EN3 Energy Consumption within the Organization
Additional disclosure requirements: Report onsite production of electricity from
renewable sources by meaningful segmentation. Report total energy consumption by meaningful
segmentation. Reporting organizations involved in new construction and redevelopment should
report known or metered energy consumption in addition to listing non-metered sources.
G4-EN6 Reduction of Energy Consumption
Additional disclosure requirements: Report actual energy savings for all assets using
recognized conversion factors. Report relevant financial data, actual or estimated. State
methodology for calculations and estimations.
G4-EN7 Reductions in Energy Requirements of Products and Services
Aspect: Water
G4-EN8 Total Water Withdrawal by Source
G4-EN9 Water Sources Significantly Affected by Withdrawal of Water
G4-EN10 Percentage and Total Volume of Water Recycled and Reused
Additional disclosure requirements: Report the total volume of water recycled and reused
by the organization linked to metered utility data.
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Aspect: Biodiversity
G4-EN11 Operational Sites Owned, Leased, Managed in, or Adjacent to, Protected Areas
and Areas of High Biodiversity Value Outside Protected Areas
G4-EN12 Description of Significant Impacts of Activities, Products, and Services on
Biodiversity in Protected Areas and Areas of High Biodiversity Value Outside Protected Areas
Aspect: Emissions
G4-EN15 Direct Greenhouse Gas Emissions
Additional disclosure requirements: Provide a breakdown of the gross direct GHG
emissions in metric tons of CO2 equivalent by meaningful segmentation, for example, portfolio,
fund, location, asset type.
G4-EN16 Energy Indirect Greenhouse Gas Emissions
G4-EN18 Greenhouse Gas Emissions Intensity
Aspect: Effluents and Waste
G4-EN22 Total Water Discharge by Quality and Destination
G4-EN23 Total Weight of Waste by Type and Disposal Method
Aspect: Supplier Environmental Assessment
G4-EN32 Percentage of New Suppliers That Were Screened Using Environmental
Criteria
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CATEGORY: SOCIAL
Aspect: Customer Health and Safety
G4-PR1 Percentage of Significant Product and Service Categories for Which Health and
Safety Impacts are Assessed for Improvement
Aspect: Product and Service Labeling
CRE8 Type and Number of Sustainability Certification, Rating and Labeling Schemes for
new Construction, Management, Occupation and Redevelopment